Half of US counties deemed 'natural disaster areas'

On Wednesday, the U.S. Department of Agriculture reported half of the nation's counties have been declared disasters because of severe droughts that has affected the West, Midwest and Southeast. NBC's Anne Thompson reports.

Just over half of the counties in the U.S. are now labeled "natural disaster areas" after the U.S. Department of Agriculture on Wednesday added 218 counties in 12 states to the list.

With drought drying up food crops and animal feedstock, the USDA also said it was allowing haying and grazing on 3.8 million protected acres, many of them wetlands, and that insurance companies agreed to a 30-day grace period for farmers on insurance premiums.

"The assistance announced today will help U.S. livestock producers dealing with climbing feed prices, critical shortages of hay and deteriorating pasturelands," Agriculture Secretary Tom Vilsack said in a statement announcing the moves.

The Nature Conservancy said it was OK with the emergency haying and grazing as long as it is "carried out with minimal impacts to wildlife and habitats."

Across 32 states, ranchers and farmers in 1,584 counties -- 50.3 percent of the total -- are now eligible for low-interest loans. Some 90 percent of those counties were listed due to drought conditions.

That's a new record and one that's been broken repeatedly in recent weeks as more counties have been added. The declarations first started on July 12.

On Monday, the USDA rated as "good-to-excellent" just 24 percent of the corn crop and 29 percent of the soybean crop, both down 2 percentage points from the previous week.

The ratings are the worst since 1988, another year of severe drought in the nation's crop-growing mid-section.

CNBC's Bertha Coombs reports on the worsening condition of crops.

Crop shortages in turn mean higher food prices. The USDA last week raised its estimates of food price inflation, saying prices could rise as much as 3.5 percent this year and up to 4 percent in 2013, led by meat.

And while the latest USDA steps might help ranchers and farmers, those groups on Monday joined forces to ask that the Environmental Protection Agency curb the mandate to produce ethanol from corn, saying it was driving up prices for animal feed.

A state or ethanol refiner must ask for such a waiver, and that hasn't happened, at least not yet.

In a statement to NBC News, the EPA said it was in "close contact with USDA as they and we keep an eye on crop yield estimates, and we will review any data or information submitted by stakeholders, industry and states."